REUTERS - Owners of the New York Mets struck out as a federal judge refused to dismiss a $386 million lawsuit by the trustee seeking money for victims of Bernard Madoff's fraud, clearing the way for a possible March 19 trial.

U.S. District Judge Jed Rakoff in Manhattan also said the trustee, Irving Picard, is entitled to collect as much as $83.3 million of "fictitious profits" from the owners, led by Fred Wilpon and Saul Katz, without a trial.

While rejecting the owners' bid to throw out the entire case, Rakoff said he nonetheless remains "skeptical" that Picard can prove they acted in bad faith in dealing with Madoff.

He also said he will not allow a jury to consider much of the "evidence" offered by both sides in their bitter, more than year-long legal battle.

"Conclusions are no substitute for facts, and too much of what the parties characterized as bombshells proved to be nothing but bombast," Rakoff wrote.

"Nevertheless," he added, "there remains a residue of disputed factual assertions from which a jury could infer either good or bad faith."

While Monday's decision keeps the case on track for trial, it could also spur settlement talks as the Mets owners try to keep control of their money-losing Major League Baseball team.

Michael McCann, a Vermont Law School professor and director of its Sports Law Institute, said the ruling signals that damages may ultimately not exceed $83 million.

"There are strong incentives for both sides to settle," McCann said. "Picard obtains certainty of payment and the potential for avoiding a long appeals process. For the Mets, there is value to not having more damaging evidence coming out, and not having to fight against the cause of victims of Bernard Madoff - and having that story told by the media."

Wilpon and Katz have maintained they saw nothing suspicious in their roughly 25 years of investing with Madoff, and "never for a moment" thought their former friend was engaged in a fraud or Ponzi scheme.

The Mets owners, in a statement on behalf of partners at their holding company Sterling Equities, said: "We are preparing for trial. We look forward to demonstrating that we were not willfully blind to the Madoff fraud."

Amanda Remus, a spokeswoman for Picard, said the trustee is reviewing the decision.

JUDGE WITH STRONG OPINIONS

In his opinion, Rakoff said Picard can recover fictitious profits that team owners took out in the two years prior to the December 2008 bankruptcy of Bernard L. Madoff Investment Securities LLC.

The judge said this amount could be as much as the $83.3 million that Picard claimed, but will be determined later and may require further legal arguments.

He said the Mets owners did not give "value" for sums withdrawn, as required under bankruptcy law.

Rakoff also said "the court remains skeptical" that the trustee can show the Mets owners acted in bad faith by investing with Madoff during that two-year period.

Last September, Rakoff threw out more than half of Picard's original $1 billion lawsuit.

"Everyone knows Rakoff is a judge with strong opinions, and in such a high-powered case he doesn't want to surprise either side," said Nancy Rapoport, a bankruptcy law professor at the University of Nevada at Las Vegas. "As you get closer to trial, both sides will consider their best settlement posture."

Mario Cuomo, the former New York governor, has been mediating the dispute. His office did not immediately return requests for comment.

Mets general manager Sandy Alderson has been quoted as saying the team lost $70 million last year.

The Mets have been slashing payroll and selling $20 million minority stakes, each representing about 4 percent ownership of the team. One of these stakes was sold to hedge fund executive Steven A. Cohen of SAC Capital Advisors.

Picard has said he has recovered $9.1 billion for Madoff's victims, although much remains tied up in litigation.

Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors have called a $64.8 billion Ponzi scheme. He is serving a 150-year sentence in a North Carolina federal prison.

The case is Picard v. Katz, U.S. District Court, Southern District of New York, No. 11-3605.